Question 1

Is an employer required to pay pension contributions in Israel?

Accepted Answer

Yes. Since 2008, a comprehensive order (tzav harchavat pensya) has required all employers in Israel to enrol employees in a pension fund and make monthly contributions. The obligation applies after 6 months of employment (or from the first day for employees who already have an active pension fund).

Question 2

What are the current mandatory pension contribution rates?

Accepted Answer

As of 2025: the employer contributes 6.5% of the employee's salary to the pension fund (of which 6% is for retirement savings and 0.5% for disability insurance). The employee contributes 6% (deducted from salary). The total contribution is 12.5% of salary, providing for both retirement savings and workplace disability cover.

Question 3

What happens to pension contributions when an employee is dismissed?

Accepted Answer

On dismissal after one year of employment, accumulated pension funds remain with the employee. Under Section 14 arrangements (the standard since 2008), the pension fund balance also serves as severance pay — the employer does not owe a separate severance payment if the Section 14 arrangement covers 100% of the salary.

Question 4

What if the employer has not been paying pension contributions?

Accepted Answer

Failure to pay pension contributions is a serious violation. The employee can claim the unpaid contributions through the Labor Tribunal, plus late payment interest. The employer's conduct may also constitute a criminal offence. Claims can be made for up to 7 years of missed contributions.

Question 5

Can an employee choose their own pension fund?

Accepted Answer

Yes. An employee who is not enrolled in a specific pension fund through a collective agreement has the right to choose the pension fund and policy type. If the employee does not choose within 60 days, the employer must enrol them in a default fund designated by the Ministry of Finance.

Question 6

Does mandatory pension apply to part-time employees?

Accepted Answer

Yes. Mandatory pension contributions apply to all employees — full-time, part-time, hourly, and temporary workers — after the qualifying period. Contributions are calculated as a percentage of actual salary, so they scale proportionally for part-time employees.

Mandatory Pension in Israel 2026

Mandatory Pension — The Legal Framework

Frequently Asked Questions

Pension Contributions Not Paid?